VWs Budgets €6.4 Billion to Fix Cheater Diesels

Volkswagen AG says about 11 million of its diesel engines are equipped with software that allows them to exceed mandated emission limits.

VW plans to take a third-quarter charge of €6.5 billion ($7.2 billion) about 60% of its its full-year net profit in 2014 for unspecified steps to "win back the trust of our customers."

The company notes that continuing investigations into the scandal may alter the cost of the effort. In the U.S., VW faces a maximum government penalty of $18 billion (€16.2 billion) for 482,000 diesels sold there, plus a growing number of consumer lawsuits.

Affected powerplants belong to VW's family of small 4-cylinder "EA 189" diesels. The company admits a "noticeable deviation between bench test results and actual road use was established solely for this type of engine."

Media reports say the bogus software tracked pedal and steering wheel movements to determine if the vehicle was being tested in a laboratory. If so, it activated the engine's full emission control system. If not, it turned off the system, allowing as much as 40 times the legally allowed emission of nitrogen oxides, a contributor to smog and respiratory ailments.

The company says all its EU 6-spec diesel engines currently used in the EU comply with legal and regulatory standards with control software that does not affect fuel consumption, emissions or performance.